Women don’t outperform men – excellent women outperform average men

The few women who make it in the boorish world of hedge funds are extremely smart, hard working and ambitious, says Merryn Somerset Webb. That gives them an advantage over the average hedge fund manager, who is merely mediocre.


The women working in hedge funds are exceptionally good; the men are merely average

Hedge funds run by women do better than those run by men. That's a dead cert. Or so says Stephen Foley in the FT.

Those that women own or run have "beaten the industry average on a one year three year and five year view." Go back to 2007 and it looks even better: they have returned 59% against an average of 37%. There's no arguing with the numbers.

The question, then, is why do women do better? Foley has the answer to that too: women are better risk managers, "less prone to wild gambles, much less likely to trade in and out of positions in response to market volatility, and generally more likely to take a long-term view".

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To Foley, that means that if we want to see the hedge fund sector doing better than it is at the moment (this isn't much to ask, by the way the sector's performance is beyond pathetic) it needs to hire more women quickly, and preferably by institutional investor mandates. "If more of the $2.7trn in hedge fund assets were institutionally earmarked for female managers, the industry would quickly find a way to meet the demand" and the result could be that it is pulled out of its underperformance funk.

This is all possible, I suppose. But it is more likely to be complete nonsense.

There are sensible arguments to be made for diversity (I'll come back to this another day). But there is a very good reason the women running hedge funds are better than the men. The hedge fund industry is a Mayfair man's world. It's all about longish hours, trading, boasting and being available for markets and clients non-stop. Setting up on your own is also pretty tough and very risky.

Not many women fancy that (or the sexism that often joins it) so they don't bother to get into it or get to the top of it. There are plenty of other highly paid careers around. Some do bother, though the ones who really love it and who are exceptionally good at it; the ones who are super tough and able; the ones who perform so well that they can't be gender stereotyped out of the business.

But the thing is that these women aren't excellent hedge fund managers because they are women. They are excellent fund managers because they are the very best, the very smartest and very much the most ambitious women in the industry.

Women don't outperform men. Excellent women outperform merely good men.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.